Centre expected to introduce new income tax slabs in Budget 2023: Report

The Centre is expected to announce a new personal income-tax regime without exemptions in the upcoming Budget, a report by Mint said. Among the many proposals being examined is to add more slabs so that the income range in each slab is narrower.

The Centre has been conducting several rounds of discussions around it. "Extensive discussions have been held, and you have to wait for the Budget for the revised scheme," a person aware of the matter told the newspaper.

The discussions revolved mostly around two aspects. One, on a new income-tax regime which is more acceptable while keeping it simple. Second, the shift by a large number of individuals should be revenue-neutral.

"First, you have to see whether moving to the new system should be revenue-neutral or you can give up, say, Rs 20,000-25,000 crore or so in revenue. Also, the slabs should not be such that it gives a perverse incentive for people to remain in a lower slab," another person aware of the matter said.

Currently, there are six slabs in the new personal income tax regime, starting with the Rs 2.5-5 lakh income bracket taxed at 5 per cent, and it increases to 10 per cent, 15 per cent, 20 per cent and to 25 per cent with each increase in income of Rs 2.5 lakh. Finally, a 30 per cent tax is levied on those earning Rs 15 lakh and above.

The report added that the basic exemption limit could be raised to Rs 5 lakh and the Budget could allow certain deductions like interest payment on home loans etc.